The Joys of Home Ownership and How to Pay Off Your Home Loan
I still remember the feeling when I bought my first home, an apartment in Townsville, the excitement and exhilaration of becoming a home owner combined with the dread over how much money I now owed the bank. For most of us this will be the most expensive purchase of our lives, and we cannot do it without getting help. Typically this help comes in the form of a 30 year home loan from our friendly bank. What we don’t get is instructions on how to pay off your home loan quicker…..
This help from our friendly bank comes at a cost, interest on the loan (plus any number of fee’s if they can get away with it). That feeling of frustration when we look at how much we have paid, and how little the home loan balance has decreased. At times it feels like we will never get ahead.
Just another 24 years and I will……..
It doesn’t need to be this way, all it takes is a little time, home loan know-how and the commitment to managing your finances. To put you on the right track to pay off your home loan.
5 Steps to Pay Off Your Home Loan
How can we start cutting years off the term of your loan and pay off your home loan?
- Align the repayments with your income – If you get paid fortnightly, make your mortgage repayments fortnightly. It will make manging your finances easier and over the life of the loan will cut down on the interest payable, saving you money.
- Paying a little extra – Just paying an exrta $10 or $20 per week can have a significant impact over the life of your home loan. For example if you pay an extra $10 each week on a $350,000 home loan, you could save $15,900 in interest costs and cut one year and five months off your loan term based on an interest rate of 4.45% and loan term of 30 years.
- Park any lump sums in your home loan – Put the $1,500 tax refund, the end of year work bonus or the inheritance from Great Uncle Charlie onto your home loan. Lump sum payments can easily cut years off the home loan.
- Don’t lower your repayments – If interest rates fall, don’t reduce your payments to the minimum repayment required by the bank. As you are already paying this amount you won’t even notice, but your home loan will as you are effective paying a little extra each payment and potentially cutting months or years off the home loan.
- Perform Regular Reviews – Give your home loan a health check, preferably every year but at least every two years. You may find that your current loan no longer meets your needs, interest rates may have changed, the loan product may have been superseded with a better option, it may have features you no longer need or you could find that there are features that you now would like.
We all dream of owning our own home out right one day, with a massive mortgage to repay it can feel like that day will never come, however if you just implement one of the steps above you will be on the right path.
It will not happen overnight, but if you commit to managing your finances you will pay off your home loan.
Are you interested in seeing if you could be saving money and on you way to owning your home sooner? Give me a call today on 07 3911 1190 or fill in the enquiry form here, to schedule your free and no-obligation “10-min” chat to discus how to pay off your home loan.